Biotech Bear Market: Another Bad Day IBB Down 2.9%…Update-1 Regeneron (REGN)

Update-1 May 5 …Biotechs Stable Today…IBB up 0.45%, XBI down 0.53%

Regeneron Pharmaceuticals (REGN) up 4.74% on sales growth,but missed on EPS.

Regeneron (REGN) raised 2016 sales estimates for Eyelea(R) to a 20-25% increase based on Q1 sales of $781M. Total Revenues were $1.2B including collaboration revenue, GAAP net income was $1.45 or $165.7M for Q1. Praluent sales for treatment of high LDL (low density lipoprotein Cholesterol by Sanofi SA were $13M. The Company expects improved access to Praluent by insurers who have resisted due to its high cost. Thirteen products are in clinical development including positive top line Phase 3 results for dupilumab for atopic dermatitis. REGN is still down 30.4% YTD and 19.8% over one year. P/S is 10 and PEG is 3.32. EPS growth this year is expected to be 85%. The stock chart shows a double bottom in April.

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Another Bad Day in Biotech: See the Big Sell-Off Across the Board

The large cap biopharma earnings season is almost complete with Regeneron (REGN) up on Thursday. We will update our financial metrics on Large Cap Biopharma Winners and Losers on Friday. Most large caps are weak after earnings.

  • Our large cap picks remain: ABBV, BMY, GILD and RHHBY. Gilead Sciences (GILD) took a big hit on earnings and is down 15% since last thursday.
  • Our only speculative pick bluebird bio (BLUE) is quite volatile in a trading range of $40-55 over the past three months. BLUE is an emerging small cap focused in gene therapy for genetic and rare diseases with clinical stage CAR-T and lentiviral technology.
  • The technicals are not looking good lately. The IBB peaked at $288 on April 22 and is down 4.5% over one month and is down 23% YTD. The XBI peaked at $58 and is down 5.7% for one month and 26% YTD.  XBI is our favorite trading vehicle during positive momentum.
  • We published a review of major ETFs and Mutual Funds in the biotechnology and health sciences sector and will complete Part-2 by the end of the month. More diversified ETFs such as the XLV and health sciences funds such as PRHSX have outperformed “pure play” biotech.
  • NASDAQ is down 5.55% YTD and 5.7% over 12 months to 4727 clearly a bear market indicator. Best case for now would be to hold support at 4600.
  • We currently have no new picks in diagnostics and tools but expect value plays to pop up in the coming months. Our 2015 Top Pick ThermoFisher Scientific  (TMO) is holding up well up 1.83% YTD. Sequencing was the big trend over the past 3 years but the “tools” stocks got way overextended such as Illumina (ILMN) down 29.7% YTD and 29.4% over 12 mos. ILMN peaked at $240 on JULY 20 during the bubblicious summer of 2015 .
  • We expect M&A to pick up in the coming months because of cheap financing and the slow growth of company revenues. A good example is the bid for Medivation (MDVN) by Sanofi SA (SNY). MDVN is up 93.2% over 3 months to $59..The market cap is $9.67B with a Price/Sales at 10.

Risk Remains OFF

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